Hedge fund giant Elliott Management has warned that the White House’s pro-crypto stance fuels an unsustainable market bubble that could cause severe financial disruption when it collapses.
The concern comes amid Donald Trump’s pro-crypto stance, which contributed heavily to his re-election as US President.
Elliott Says Crypto is “Ground Zero” for Speculative Frenzy
The Financial Times reported the hedge funds’ warning, citing a letter to investors. Per the report, Elliott cautioned that the speculative mania surrounding digital assets, as amplified by political support, represents a looming financial risk with unpredictable consequences.
The $70 billion hedge fund, founded by billionaire Paul Singer, criticized the US government’s increasing alignment with cryptocurrencies. Specifically, Elliot argued that such assets lack fundamental value yet have surged due to perceived proximity to the White House.
Against this backdrop, the firm warned that embracing digital assets that could marginalize the US dollar. In their opinion, the global reserve currency is a dangerous policy direction.
According to the investor letter, Elliott has “never seen a market like this.” The firm pointed to the AI-driven stock rally and soaring cryptocurrency prices as evidence that investors are behaving irrationally. It singled out crypto as the epicenter of the speculative surge, describing it as assets with “no substance.”
The hedge fund believes that the crypto industry has grown to dangerous levels due to White House endorsement.
“Crypto is ground zero…could wreak havoc in ways we cannot yet anticipate,” the report stated, citing Elliot.
Elliott’s criticism is notable given Singer’s political connections. Despite being a longtime Republican donor and contributing $56 million to conservative candidates in the 2024 election cycle, Singer has frequently voiced skepticism about cryptocurrencies.
His hedge fund now argues that political support for digital assets, particularly under the Trump administration, has exacerbated reckless speculation.
Beyond policymaking, Trump’s personal and business dealings have deepened his ties to the crypto sector. Alongside his sons and business associates, Trump backed World Liberty Financial (WLFI), a cryptocurrency platform launched last year.
He and the First Lady have also introduced meme coins, TRUMP and MELANIA, respectively, presenting a speculative class of cryptocurrencies with no inherent value. Similarly, Trump Media, where the former president holds a majority stake, also announced plans to invest up to $250 million in crypto. These actions, Elliott warns, have further legitimized speculative behavior in the market.
Additionally, pro-crypto lobbying has surged, with the Fairshake PAC spending $173 million in the 2023-2024 election cycle to support crypto-friendly candidates. The advocacy group has a $116 million war chest for the 2026 midterms.
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